Asian Stocks Snap Four-Day Loss as IMF to Raise Forecast

Yoshiaki Nohara and Toshiro Hasegawa

January 8, 2014 — 5:41 AM ESTJanuary 8, 2014 — 5:41 AM EST

Asian stocks rose, with the regional benchmark gauge posting the first gain in five days, as the International Monetary Fund said it will raise its global economic growth forecast and the U.S. trade deficit narrowed.

The MSCI Asia Pacific Index advanced 1 percent to 139.8 as of 7:34 p.m. in Tokyo, for its biggest rally since Nov. 18. Almost three stocks rose for each that fell.

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“The U.S. trade figures and the IMF’s plans to raise its global economic growth forecasts show that the world economy is on a recovery path,” Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities, a unit of Japan’s second-biggest lender, said by phone. “The outlook is for U.S. fourth-quarter earnings to be favorable, and the expectations are also strong for Japanese company earnings.”

Japan’s Topix index rose 1.8 percent to the highest close since July 2008 as the yen fell. Earnings season began this week in Japan, with about 90 companies listed on the Topix reporting through Friday, data compiled by Bloomberg show. South Korea’s Kospi index and Australia’s S&P/ASX 200 Index were both little changed while New Zealand’s NZX 50 Index rose 0.4 percent.

IMF Outlook

The IMF expects to upgrade its outlook for global economic growth, Managing Director Christine Lagarde told reporters in the Kenyan capital of Nairobi. The organization plans to announce a new forecast “about three weeks from now,” she said.

Data yesterday showed the trade deficit in the U.S. shrank more than forecast in November as oil imports dropped to the lowest level in three years and exports climbed to a record.

The gap narrowed 12.9 percent to $34.3 billion, smaller than projected by any economist surveyed by Bloomberg and the least since October 2009, the Commerce Department reported in Washington. West Texas Intermediate crude halted its longest run of declines since September after the Standard & Poor’s 500 Index gained 0.6 percent yesterday. Futures on the gauge were little changed today.

U.S. Payrolls

“The U.S. trade data has improved the risk sentiment,” Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd., which has 35 trillion yen ($333 billion) in assets, said by phone in Tokyo. “That will stop a correction mode that’s continued this month, but things may not change dramatically as investors await jobs data in the U.S.”

The ADP Research Institute reports the change in U.S. company payrolls today and minutes from the Federal Reserve’s December meeting will be released. The Labor Department will provide the unemployment rate and new hiring figures for last month on Jan. 10. The Fed, which has made job creation a condition for reducing asset purchases, said last month that it would slow the pace of bond buying.

Nintendo surged 11 percent to 15,850 yen, rising the most on the 1,005-member MSCI Asia Pacific gauge. China’s ruling State Council temporarily suspended the ban and will draft new rules allowing consoles to be made in the Shanghai free-trade zone, it said in a statement Jan. 6.

Belle Surges

Belle International soared 13 percent to HK$9.95 as Barclays analysts Candy Huang and Ally Wang said the retailer may boost earnings by 13 percent in the second half from a year earlier.

Seven & I Holdings jumped 6 percent to 4,480 yen after saying its operating profit for the quarter ended November was 84.6 billion yen. Its price target was raised to 4,600 yen from 4,200 yen at Bank of America Corp.’s Merrill Lynch unit.

Chow Tai Fook Jewellery Group Ltd., the world’s largest jewelry chain, jumped 10 percent to HK$12.92 after reporting that quarterly sales increased 26 percent. It plans to open 200 points of sale in the fiscal year that starts in April, Managing Director Kent Wong said on a conference call yesterday.

Mitsubishi Motors Corp. dropped 4 percent to 1,086 yen after the Japanese carmaker said yesterday it plans to raise as much as 241.6 billion yen in a public share sale.

The Asia-Pacific gauge traded at 13.1 times estimated earnings, compared with 15.5 for the S&P 500 and 13.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.